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Issues Involved:
1. Valuation of fixed assets for wealth-tax purposes. 2. Exclusion of contingency reserve, tariff and dividend control reserve, and development reserve from net wealth. 3. Exclusion of service line contribution account from net wealth. Issue-wise Detailed Analysis: 1. Valuation of Fixed Assets for Wealth-Tax Purposes: The primary issue was whether the value of the fixed assets of the company should be taken at the written down value as determined under the Income-tax Act or as shown in the balance-sheet on the relevant valuation dates. The Tribunal held that the value of the fixed assets should be based on the figures in the balance-sheet, as the assessee did not provide sufficient evidence to show that these values were inflated. The Tribunal noted that the depreciation rates under the Electricity (Supply) Act were appropriate for the electricity industry and more likely to represent the correct market value. The court supported this view, emphasizing that the Wealth-tax Act and the Income-tax Act serve different purposes, with the former focusing on the true market value of assets. The court cited various precedents, including the Supreme Court's decision in Commissioner of Wealth-tax v. Hindustan Motors Ltd., to reinforce that the burden of proof lies on the assessee to demonstrate that the written down value under the Income-tax Act represents the true market value. Consequently, the court concluded that the written down value as shown in the balance-sheet should be taken as the value of the fixed assets for wealth-tax purposes. 2. Exclusion of Contingency Reserve, Tariff and Dividend Control Reserve, and Development Reserve from Net Wealth: The second issue was whether these reserves should be excluded from the computation of net wealth. The Tribunal initially found that the contingency reserve should be excluded because it had to be handed over to the purchaser and could only be used for specified purposes. However, the court referred to its previous decision in Commissioner of Wealth-tax v. Bombay Suburban Electric Supply Ltd., which held that the amounts standing to the credit of the development reserve and the contingencies reserve were liable to be included in the net wealth of the assessee. Applying the same rationale, the court concluded that the tariff and dividend control reserve should also be included in the net wealth. The court emphasized that these reserves were created from the profits of the licensee and had to be handed over to the purchaser, thus forming part of the company's assets. Therefore, the amounts in these reserves should not be excluded from the computation of net wealth. 3. Exclusion of Service Line Contribution Account from Net Wealth: The third issue was whether the amount lying to the credit of the service line contribution account should be excluded from the net wealth for the assessment year 1959-60. The Tribunal initially held that the company was entitled to a deduction of the value of the service lines contributed by the consumers. However, the court referred to the Supreme Court's decision in Calcutta Electric Supply Corporation v. Commissioner of Wealth-tax, which held that such amounts were not deductible in determining the net wealth of the assets under section 7(2)(a) of the Wealth-tax Act. The court reiterated that the relevant test for wealth-tax purposes is whether the assessee is the owner of the assets on the valuation date, regardless of how those assets were acquired. Consequently, the court concluded that the amount lying to the credit of the service line contribution account should not be excluded from the net wealth. Conclusion: 1. The written down value of the fixed assets as shown in the balance-sheet should be taken for wealth-tax purposes. 2. The amounts in the contingency reserve, tariff and dividend control reserve, and development reserve should not be excluded from the computation of net wealth. 3. The amount lying to the credit of the service line contribution account should not be excluded from the net wealth. The court ruled in favor of the revenue on all three issues, with the costs to be borne by the assessee.
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